BUSINESS Boeing to pay 200 mln USD to settle SEC charges on misleading investors about 737 MAX

BUSINESS

Boeing to pay 200 mln USD to settle SEC charges on misleading investors about 737 MAX

Xinhua

08:21, September 23, 2022

Logo of Boeing. (Photo via CGTN)

WASHINGTON, Sept. 22 (Xinhua) -- Aviation giant Boeing will pay 200 million U.S. dollars and its former CEO will pay 1 million dollars to settle charges over misleading investors after two deadly crashes of 737 Max jetliners, the Securities and Exchange Commission (SEC) said Thursday.

The crashes of Lion Air Flight 610 in October 2018 and Ethiopian Airlines Flight 302 in March 2019 involved Boeing's 737 MAX airplane and a flight control function called the Maneuvering Characteristics Augmentation System.

According to the SEC's orders, after the first crash, Boeing and then Chief Executive Officer Dennis Muilenburg knew that system posed an ongoing airplane safety issue, but nevertheless assured the public that the 737 MAX airplane was "as safe as any that has ever flown the skies."

Later, following the second crash, Boeing and Muilenburg assured the public that there were no slips or gaps in the certification process with respect to the system, despite being aware of contrary information.

"In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets," SEC Chair Gary Gensler said in a statement.

"The Boeing Company and its former CEO, Dennis Muilenburg, failed in this most basic obligation," Gensler said. "They misled investors by providing assurances about the safety of the 737 MAX, despite knowing about serious safety concerns."

"Boeing and Muilenburg put profits over people by misleading investors about the safety of the 737 MAX all in an effort to rehabilitate Boeing's image following two tragic accidents that resulted in the loss of 346 lives and incalculable grief to so many families," said Gurbir S. Grewal, director of the SEC's enforcement division.

The SEC's orders against Boeing and Muilenburg find that they negligently violated the antifraud provisions of federal securities laws. Without admitting or denying the SEC's findings, Boeing and Muilenburg consented to cease-and-desist orders that include penalties of 200 million and 1 million dollars, respectively.

Boeing's commercially best seller 737 MAX was grounded globally in March 2019 in the wake of the two deadly air crashes in less than one year.

Amid growing crisis, then CEO Muilenburg resigned from his position in December 2019.

In November 2020, the U.S. Federal Aviation Administration cleared Boeing 737 Max to fly again after a 20-month grounding.

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